Shorts Raise Stakes on British Airways

Deutsche Lufthansa has reached a deal to acquire the U.K. carrier BMI, ending months of negotiations over conditions of sale and price. The deal will make Lufthansa the second largest carrier at Heathrow. British Airway's (OTC:BAIRY) share price fell 8.7% on the back of this news and has fallen 15% since March 23rd.

The bad news for BA keeps on coming as the pension trustees blamed the large deficit of their pension portfolio on the airline's higher risk investment strategy. Reports over the weekend also suggested that BA is considering selling or winding down its OpenSkies subsidiary as traffic over the Atlantic continues to fall.

BA's short base (as measured by Percent Shares Outstanding on Loan) has increased 79% over the last 3 months to 3.7%, this is down from the 20% high which was hit last September. Deutsche Lufthansa's (OTCQX:DLAKY) short base over the last month has fallen 40% to 3.4%. American Airlines (AMR) short base is at 7.6% an increase of 6% over the last month.